A unanimous Court holds that ERISA imposes no deadline on the selection of actuarial assumptions - with significant consequences for withdrawing employers.

Key Takeaway

A unanimous Supreme Court held that ERISA does not require a multiemployer pension plan to use actuarial assumptions adopted on or before the statutory measurement date when calculating an employer’s withdrawal liability. Plans and their actuaries may select assumptions - including a lower discount rate that dramatically increases withdrawal liability - after the measurement date, so long as those assumptions are “reasonable” and reflect the actuary’s “best estimate.”

On May 21, 2026, the U.S. Supreme Court issued a unanimous decision in M & K Employee Solutions, LLC v. Trustees of the IAM National Pension Fund, resolving a circuit split and significantly affecting how withdrawal liability is calculated under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

In a 9-0 opinion authored by Justice Ketanji Brown Jackson, the Court held that ERISA does not require multiemployer pension plans to base withdrawal liability calculations solely on actuarial assumptions adopted as of the statutory “measurement date.” Instead, actuaries may select assumptions after that date, provided they reflect the plan’s condition as of the end of the relevant plan year.

This ruling grants plan actuaries meaningful flexibility and, in practice, may substantially increase withdrawal liability exposure for employers exiting underfunded multiemployer plans.

Background

When an employer withdraws from an underfunded multiemployer pension plan (MPP), ERISA requires it to pay “withdrawal liability” - its allocable share of the plan’s unfunded vested benefits (UVBs). By statute, withdrawal liability is calculated as of the last day of the plan year preceding the employer’s withdrawal, known as the “measurement date.”

Determining UVBs is an actuarial exercise that depends on both hard data (e.g., the number of plan beneficiaries and current asset values) and forward-looking assumptions, most critically the discount rate - the interest rate used to reduce future benefit obligations to their present value. A lower discount rate produces a higher UVB figure and, accordingly, a higher withdrawal liability assessment.

In this case, the petitioner-employers withdrew from the IAM National Pension Fund during 2018. The Fund’s measurement date was December 31, 2017. However, in January 2018 - after the measurement date - the Fund’s actuarial firm, Cheiron, adopted a new discount rate of 6.50%, down from the 7.50% rate previously in use. Applying the lower rate caused the Fund’s UVBs to balloon from approximately $500 million to over $3 billion. One employer’s withdrawal liability assessment jumped from roughly $1.8 million to approximately $6.2 million as a result.

The employers challenged the assessments in arbitration, arguing that the Fund was required to use the actuarial assumptions “in effect” as of the measurement date. The arbitrators agreed. Federal district courts and the D.C. Circuit disagreed, and the Supreme Court granted certiorari to resolve a split between the D.C. and Second Circuits.

The Court’s Holding

The Supreme Court affirmed the D.C. Circuit, holding that ERISA does not require actuarial assumptions used to calculate withdrawal liability to be selected on or before the statutory measurement date.

Key Reasoning

Justice Jackson, writing for a unanimous Court, affirmed the D.C. Circuit and held that neither of the two ERISA provisions governing withdrawal liability calculations - §§ 1391 and 1393 - requires actuarial assumptions to be selected on or before the measurement date. The Court’s reasoning rested on three key points:

1. The “as of” language in § 1391 fixes facts, not tools. Section 1391 requires withdrawal liability to be calculated based on UVBs “as of” the measurement date. The Court held that this language fixes the reference point for hard data about the plan (e.g., beneficiary counts, asset values) but says nothing about when the actuarial tools used to calculate UVBs—including the discount rate—must be selected. Actuarial assumptions are predictive judgments, not observable facts, and cannot be “frozen” on the measurement date.
2. Section 1393 imposes no timing deadline. The section of ERISA governing the selection of actuarial assumptions requires only that those assumptions be “reasonable,” account for “the experience of the plan and reasonable expectations,” and reflect the actuary’s “best estimate of anticipated experience under the plan.” The Court declined to read a timing requirement into a statute that contains none, particularly where Congress expressly imposed deadline-like constraints in other ERISA provisions but chose not to do so in § 1393.
3. The “best estimate” mandate supports post-measurement-date selection. Because relevant economic data may not become available until after the measurement date, requiring pre-measurement-date assumptions could prevent actuaries from using the most current information - undermining Congress’s goal of requiring assumptions that reflect the actuary’s “best estimate.”

The Court also rejected the employers’ policy argument that permitting post-measurement-date assumptions invites manipulation. Even under the employers’ proposed rule, the Court noted, actuaries could still select assumptions strategically before the measurement date. In any event, “policy concerns cannot trump the best interpretation of the statutory text.” Patel v. Garland, 596 U.S. 328, 346 (2022). Employers retain the right to challenge unreasonable assumptions in arbitration.

Practical Implications for Employers

1. Withdrawal liability exposure is harder to predict. Employers that have withdrawn or are considering withdrawal from an MPP cannot rely solely on the actuarial assumptions in place at the measurement date to estimate their liability. Plans may legitimately adopt more conservative (lower) discount rates after the measurement date, potentially increasing assessments significantly.
2. Arbitration challenges remain available. The decision does not eliminate employer remedies. Assumptions adopted after the measurement date are still subject to ERISA’s requirement that they be “reasonable” and constitute the actuary’s “best estimate.” Employers may challenge assumptions in arbitration as unreasonable, particularly where a dramatic post-measurement-date change appears designed to increase liability rather than to reflect updated economic conditions.
3. Due diligence in M&A transactions requires heightened scrutiny. Buyers acquiring companies with MPP obligations—or the obligations themselves—should account for the possibility that the plan’s actuaries may adopt new assumptions after a measurement date in ways that significantly alter the UVB figure. Enhanced withdrawal liability diligence, including consultation with actuarial and ERISA counsel, is advisable.
4. The information-timing question remains open. The Court expressly reserved the question of whether actuarial assumptions must be based only on information available as of the measurement date, even if the assumptions themselves are selected later. This issue remains to be resolved and may be the next front of litigation in this area.
5. Existing assessments should be reviewed promptly. Employers who have received withdrawal liability assessments where actuarial assumptions were adopted after the measurement date, and who may have pending or recently concluded arbitrations on that basis, should consult counsel immediately to assess their options in light of this ruling.

Conclusion

The Supreme Court’s decision in M & K Employee Solutions resolves a long-standing circuit split and clarifies that ERISA permits pension plans to use actuarial assumptions adopted after the statutory measurement date.

While the ruling is grounded in statutory interpretation, its real-world impact is significant: it enhances plan flexibility while increasing uncertainty and potentially the cost for participating employers.

Employers participating in multiemployer pension plans should reassess withdrawal strategies, evaluate actuarial assumptions carefully, and consider proactively modeling exposure under varying assumptions.

Please contact a member of Pryor Cashman’s Executive Compensation, ERISA + Employee Benefits Practice or Labor + Employment Group for specific advice or counsel.